Sponsored Content: Why Quebec Hydro Doesn’t Work For Ontario

Sponsored Content: Why Quebec Hydro Doesn’t Work For Ontario

The idea of importing hydro electricity from Quebec into Ontario is often cited by some environmental groups as a viable clean-energy alternative to the baseload provided by Ontario’s nuclear fleet.

At face value, this may sound like a good idea. After all, Quebec’s electricity prices are the lowest in the country and Quebec already exports vast quantities of hydro electricity to the New England states.

But two new studies are throwing cold water on the idea of importing large amounts of hydro from Quebec for this purpose.

One of these is a report released in May by one of the article’s authors. The report[1] concluded that enhancing the capacity for Ontario to import Quebec electricity involves considerable costs which exceed the anticipated benefits, especially in light of the two provinces’ respective demand-and-supply forecasts.

For instance, Quebec does not currently have available generation capacity all year-round and already relies on Ontario's gas-fired generation capacity to bridge the gap in the winter. While Quebec's energy surplus is available for most of the rest of each year, even this is forecast to evaporate by 2028.

Similarly, Ontario would not have reliable low-carbon supply to send to Quebec after the Pickering nuclear generating station retires in 2024, removing a resource that Quebec uses to store water and support its surplus.

These emerging supply-and-demand dynamics suggest that, when Ontario needs reliable energy from Quebec in the future, Quebec’s hydroelectric resources won’t be able to meet the demand. Conversely, when Quebec needs winter supply from Ontario in less than a decade, Ontario won’t have low-carbon generation available.

The second study – a report by Ontario’s Independent Electricity System Operator (IESO) – suggests that Quebec would not be able to supply Ontario with electricity year-round if Ontario lost substantial nuclear baseload power.

“Hydro-Quebec (HQ) notes that they currently have a need for additional winter peaking capacity in the range of 500 – 1,500 MW in the 2017 – 2023 time-frame,” the IESO states. “Therefore, to be able to supply Ontario with firm year-round capacity, it is expected that HQ would need to build additional resources above what they have for internal capacity needs.”

An earlier IESO report in 2014 concluded that both Quebec and Ontario would have to build new infrastructure in order for Quebec to provide power to Ontario. The report estimated the cost of electricity from Quebec could approach $130/MWh. A detailed analysis of Hydro Quebec’s latest generation capacity has estimated that the net cost to Ontarians would be $150/MWh for this solution – double the expected $70-$80/MWh cost of electricity from Ontario’s refurbished nuclear power.

Thus, the argument to replace Ontario nuclear power with unlimited cheap Quebec hydroelectric power is fundamentally too good to be true. Moreover, it ignores the value that low-cost nuclear power provides to the province: safe, reliable and clean baseload power from the Darlington refurbishment, in the first 10 years alone, will save Ontario ratepayers $21B and contribute $24B more to Ontario’s economy than the Quebec import alternative.[2]

One must also consider the counterproductive aspect of replacing one form of low-carbon energy with another form of low-carbon electricity, especially when governments across the globe are attempting to meet ambitious greenhouse gas reduction targets to mitigate climate change. The Government of Canada has stated that substantial amounts of both new nuclear and new hydroelectric capacity are required to address climate change.[3]

Like all things that appear to be a cure for all ills, the real solution is somewhat more complex. Interties for Quebec hydro imports as a stop-gap or reserve measure between good neighbours is one thing. However, portraying such imports as a cost-effective baseload replacement is a non-viable solution to a problem that does not exist.

Dr. John Barrett is President and CEO of the Canadian Nuclear Association, a non-profit organization established in 1960 to represent the nuclear industry in Canada.

Marc Brouillette is the Principal Consultant and founder of Strategic Policy Economics. Marc has been practicing strategy consulting for 14 years and has 16 years of prior industry experience. His practice has been focused on addressing multi-stakeholder issues stemming from innovationsin policy-driven regulated environments.

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